Credit Growth Is Stagnant In July

September 10, 1986|By United Press International.

WASHINGTON — Americans increased their short-term installment debt at an annual rate of 11.4 percent in July, down fractionally from the revised 11.5 percent rate of credit growth in June, the Federal Reserve Board said Tuesday.

Consumer installment credit outstanding at the end of July increased by a seasonally adjusted $5.38 billion from the previous month to $573.03 billion after a revised $5.39 billion gain in June, the Fed said in a statistical report.

The annual rate of credit growth was slightly below the 12.2 percent pace in the second quarter of this year. Short-term consumer debt has grown by 14.6 percent since July, 1985.

The July growth rate was the slowest since April, when credit expanded by 10.6 percent at an annual rate.

Credit growth for the month would have been substantially smaller had it not been for a $3.6 billion increase in outstanding auto loans. The gain represents a 19.5 percent annual rate of auto credit growth.

Auto credit expanded at a 20 percent annual rate in June after a 17.5 percent pace in May.

Outstanding loans for mobile homes in July, on the other hand, decreased by $82 million, 3.8 percent at an annual rate, after an $81 million decline the previous month.

Short-term consumer debt, which does not include home loans, takes up nearly 20 percent of an average American`s disposable income. The relatively high level of consumer debt means most Americans are confident the economy remains relatively stable and do not expect a recession in the near future.

Some economists, however, are worried that consumers have taken on about as much debt as they can sustain, and this has created some concern about the prospects for continuing demand for consumer goods.